Real estate sector is key to Orange County's job growth

Look around town and marvel at all the new housing construction. You'll see upswings in home prices and apartment rents; fewer “For Rent” signs in front of commercial properties; and crowded parking lots at lumber yards and home-improvement stores.

Whether you're in real estate or not, you should hope this recent revival is for real. Orange County's economy needs what I'll call the “property game” for the broader economy recovery to continue.

It's not that I like real estate people more than those who toil in other sectors. It's a simple bet on the hot hand.

I say this after looking at an obviously key economic measure – jobs. I added up all the real estate related work counted by state job trackers – real estate sales and leasing, construction, building supplies sales, lending, architecture and design, farm workers, and building maintenance – to find the property game's employment clout.

For historical context, my trusty spreadsheet tells me that roughly 1-in-7 local workers got a paycheck from the property game since 1990. That's a healthy-size sector that curiously has produced a hiring pace since 1990 that's exactly the same as found in the remainder of the Orange County economy – a 1 percent annualized growth.

So why do we end up constantly talking about real estate?

Politely, it's because the property game is such an extremely fluid slice of Orange County's economic engine. Mathematically speaking, changes in the property game's job growth – using standard deviation math – show real estate hiring patterns being three times as volatile as the rest of the local economy.

Let's walk through the most recent real estate job gyrations.

In August, 214,800 people held jobs in what I determined was the property game. That's the highest level since December 2008. The recent hiring spree put the property game's slice of Orange County's overall job count up at a just-above average 15.2 percent.

Please note that by this measure of local economic impact, real estate's cyclical bottom was pretty recent: In April 2012, the property game's local job share had fallen to 14.1 percent – real estate's lowest share of Orange County employment in 14 years.

You probably remember how the property game lost its economic clout. But look at those fluctuations through the jobs prism.

First, think back to the go-go years. In the eight years between 1998's property game job bottom and its bubble-fueled peak, Orange County real estate industries added 90,000 workers to amass a 273,000-strong workforce. That 50 percent growth rate from 1998 to 2006 meant that the property game's local job share had jumped to nearly 18 percent. Yet this slice of the business climate accounted for four-in-10 of every new local job created in that boom period.

Then came extreme real estate pain.

From the property game's 2006 job-slice peak to last year's low share, these industries shed 75,000 workers – or 5-of-every-6 real estate jobs gained in the previous boom. Real estate workers filled unemployment rolls as the property game's layoffs equaled 6-in-10 of all the local jobs lost in the six-year period.

Recovery finally arrived. Bosses in the property game added 17,800 jobs from April 2012's trough up through August. How was hiring in all other Orange County industries? The county saw just 4,600 positions added in the same period. If you prefer percentages, it's equally stunning: The property game built 9 percent job growth vs. everybody else's 0.4 percent.

It's common for real estate workers to enjoy a different job market than the rest of the economy. To track “counter-cyclicality” – or why real estate people can seem a little kooky – I looked at how bosses in the property game hired or fired (based on year-over-year job change) vs. the rest of the economy's business leaders since 1990. I found that real estate jobs moved in the opposite direction compared to other sectors 14 percent of the time – a rate equal to once every seven months.

So if you'd like to witness more overall local business oomph, you might want to become a fan of the nutty sector with today's momentum: real estate.

Another option: Hope that somehow the Orange County's other bosses remember how to hire.

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